Financial Glossary


G

General Partnership. An ownership entity in which two or more partners are involved, and which results in unlimited liability for the owners, unlike a Corporation.

Generally Accepted Accounting Principles (GAAP). A technical accounting method that encompasses the conventions, rules, and procedures established in the United States for the recording of a company's financial matters. All public U. S. companies are required to follow GAAP.

Goal. Object of effort or ambition; directed towards a purpose.

Golden Parachute. Contractual payments sometimes made to current management in the event of a takeover of the company.

Goodwill. In accounting, it is the excess of the purchase price over the fair market value of the net assets acquired. In a transaction accounted for under the Purchase Accounting method goodwill can become a balance sheet item.

Green Shoe. The underwriter's over-allotment allocation in a securities offering which gives an underwriter the right (but not the obligation) to purchase additional stock in connection with a public offering. The theoretical purpose of this standard over-allotment allocation is to permit the underwriter to stabilize the after-market for the companies' securities during the period immediately following a public offering. It is typically an additional 15 percent of the agreed-upon underwriting amount.

Gross Domestic Product (GDP) or Annual Economic Output. The total value of all goods and services produced within the US during a given year. Simply put, the monetary value of all the finished goods and services produced within a country's borders in a specific time period, though GDP is usually calculated on an annual basis. It includes all of private and public consumption, government outlays, investments and exports less imports that occur within a defined territory. Also referred to as annual economic output or just output. To avoid counting the same output more than once, GDP includes only final goods and services -- not those which are used to make another product. For example, GDP would not include the wheat that is used to make bread, but would include the bread itself. 

Gross Income. Income from all sources before any deductions.

Gross Margin. The gross income of a company, divided by the net sales, and expressed as a percentage.

Gross Profit. A company's net sales minus its cost of goods.

Group of Seven (G-7). The world's seven largest industrial market economies, namely the United States, Japan, Germany, France, Britain, Italy and Canada. The leaders of these countries meet annually, accompanied by officials, to discuss major political and economic issues of mutual concern. In addition, G-7 finance ministers meet several times a year to discuss economic policy. Their work is supported by regular, functional meetings of officials, including the G-7 Finance Deputies.

Growth. A percentage increase in the production of goods and services over a given period.Nominal growth is the increase including changes in prices. Real growth is the increase excluding changes in prices. Growth or economic growth may refer to either measure.

Growth Stock. Shares of companies whose earnings are expected to increase at an above-average rate. Growth stocks are often typified by their low yields and relatively high price/earnings rations. Their prices reflect investors' belief in their future earnings in growth.